UNITED STATES v. EHRLICH

April 15, 1952

UNITED STATESv.EHRLICH. UNITED STATES V. FISHER.

The opinion of the court was delivered by: McGRANERY, District Judge.

Each of the two defendants in these cases has been indicted on
three counts under Sec. 145(b) of the Internal Revenue Code, 26
United States Code, § 145(b).*fn1 It is charged in Counts I and
III of the bills that each defendant willfully and knowingly
attempted to defeat and evade part of the income tax due and
owing by him to the United States for the calendar years 1945 and
1947 by filing with the Collector of Internal Revenue for the
First Internal Revenue Collection District of Pennsylvania false
and fraudulent returns covering those years. It is further
charged, in Count II of each indictment, that as to the year
1946, each defendant attempted to evade a large part of the tax
due both by submitting to the person preparing the respective
returns false and fraudulent books and records and by failing to
file any tax return whatever.

The present motion by the defendants seeks the dismissal of
Count I of each indictment, pleading in bar the statute of
limitations fixed by the Internal Revenue Code for the bringing
of criminal prosecutions. The pertinent portion of that statute,
Sec. 3748(a) of the Internal Revenue Code, 26 U.S.C.A. § 3748(a)
reads:

"§ 3748. Periods of limitation

"(a) Criminal prosecutions. No person shall be
prosecuted, tried, or punished, for any of the
various offenses arising under the internal revenue
laws of the United States unless the indictment is
found or the information instituted within three
years next after the commission of the offense,
except that the period of limitation shall be six
years —

"(2) for the offense of willfully attempting in any
manner to evade or defeat any tax or the payment
thereof, * * *."

The indictment in each case was found on February 15, 1952.

The defendants filed income tax returns for the calendar year
1945 on or about January 15, 1946. The returns were executed upon
Form 1040, the so-called long form, and defendants certified them
as true, correct and complete. They were prepared by an
accountant for defendants, and bear date of January 11, 1946 on
the originals signed by such accountant. These returns were the
only returns for the calendar year 1945 submitted by defendants,
and were filed on January 15, 1946, to avoid penalties that would
otherwise accrue by reason of defendants' failure, in the
Declaration of Estimated Tax for 1945, to gauge the sum to be
paid by them with anything like precision: the estimated tax in
each case was less than one-third of the total tax liability
ultimately reported.

Whether Count I of the indictments can stand depends upon which
of two dates is taken as the date of the commission of the
offense charged therein: January 15, 1946, when defendants in
fact filed their returns for the year 1945, or March 15, 1946,
the last permissible date for such filing. The indictments
charge that it is the latter date that is the date of the
offense. The Government urges that consequently the statute of
limitations is no bar to prosecution, since only five years and
eleven months from the date of the alleged crime had elapsed at
the time that the grand jury found the indictments. With this
contention the Court cannot agree. The crime, if any, was
committed on the filing of the returns on January 15, 1946; and
prosecution is barred by the statute.

The decision in Cave v. United States, 8 Cir., 1947,
159 F.2d 464, certiorari denied 331 U.S. 847, 67 S.Ct. 1732, 91 L.Ed.
1856, is dispositive of the instant motion. There, the fourth
count of the indictment had charged defendant with attempting to
defeat and evade tax for the year 1944 by filing a false and
fraudulent return on January 15, 1945. On appeal, defendant
contended that since his tax payment was not due until March
15, 1945, there could be no criminal attempt to defeat or evade
it prior to that time. The Court rejected that argument in these
words, 159 F.2d at page 467:

"The argument is fallacious. A taxpayer whose
returns are made on the basis of the calendar year
may file his return with the collector `on or
before the 15th day of March following the close of
the calendar year,' § 53(a)(1) Internal Revenue
Code, 26 U.S.C.A. Int.Rev.Code, § 53(a)(1); and the
tax `shall be paid on the fifteenth day of March
following the close of the calendar year,' § 56(a);
and it `may be paid * * * prior to the date
prescribed for its payment,' § 56(d). The crime
denounced by § 145(b) of willfully attempting to
defeat or evade the tax is complete when the taxpayer
willfully and knowingly files a false and fraudulent
return with intent to defeat or evade any part of the
tax due the United States. Guzik v. United States, 7
Cir., 54 F.2d 618, 619, certiorari denied
285 U.S. 545, 52 S.Ct. 395, 76 L.Ed. 937; Bowles v. United
States, 4 Cir., 73 F.2d 772, 774." (Emphasis added.)

The Court of Appeals for this Circuit approved the quoted
statement in United States v. Croessant, 3 Cir., 1949,
178 F.2d 96, certiorari denied, 1950, 339 U.S. 927, 70 S.Ct. 626, 94 L.Ed.
1348, although it must be pointed out that the question there
involved was not the same as that in the case at bar. Defendant
there urged, unsuccessfully, that proof of what he had done would
not sustain a conviction for felony under Sec. 145(b) of the
Internal Revenue Code, since the United States Supreme Court, in
Spies v. United States, 1943, 317 U.S. 492, 63 S.Ct. 364, 87
L.Ed. 418, had held that the failure to file the required return
would not support such a conviction. Hence, he argued, a
fortiori, filing a false return could be no graver offense than
omission to file any return. In the course of its opinion, in
sketching out the distinction between a mere default and a
willful misrepresentation, the Court of Appeals declared, 178
F.2d at page 98:

"The Eighth Circuit has passed twice upon this
question. The proposition decided in the first case
was restated in the latest case in language hardly to
be improved upon for concise clarity. Here it is
said: `The crime denounced by § 145(b) * * * is
complete when the taxpayer willfully and knowingly
files a false and fraudulent return with intent to
defeat or evade any part of the tax due the United
States." [Footnotes omitted.]

The view of the law taken in the Cave opinion also finds
support in 9 Cyclopedia of Federal Procedure, Second Edition, ...

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